17 unit deal: Seller wants to carry the note

[Ben Garrison]

Hi all, Big Ben here in Chattanooga. I'm in talks with the long time owner of a 17 unit apartment building, 1bdrms and studios. He owns it outright and has taken all of his depreciation. Grossing around $7k a month, 2 vacancies. I like the area it's in. Seller is really pushing to carry the note, for various reasons including avoiding the big cap gains tax hit from a sale. I've never done a Seller Financed deal and wanted to ask for your advice. Do you have an example of how you structured terms when buying in a situation like this? Let me know if I left out anything you'd like to know.

[Mark Fedorov]

If you can get him to do close to market rate, oh hell yes! You can save a TON of money from bank fees etc.

Spend the money to have your lawyer review (or offer to write up) the note and mortgage. What your seller does not understand is that, if he does his taxes legally, he will still have the cap gain hit, but that seems to be his problem, not yours.

Still do the title search.. no matter what.